Struggling with debt?

PERSONAL GUARANTEES HURT SMALL BUSINESS OWNERS.

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We can help you. We can help you. We can help you.

What’s the Real Issue with Merchant Cash Advances and Personal Guarantees?
Merchant cash advances (MCA) are often marketed as an easy, quick way for business owners to get cash. Regardless of whether you have strong credit, or stable revenue, an MCA provider might approve you within hours. The catch: personal guarantees. Once you sign a personal guarantee, you’re legally on the hook for repaying the MCA—even if your business can’t.

Why Does This Matter?
If your business defaults, creditors might try to TAKE YOUR WAGES, freeze your personal accounts, or file a lawsuit against you personally. Under most merchant cash advance agreements, the MCA provider can come after your personal assets if you can’t pay. This makes the stakes higher than traditional business debt.

Delancey Street is a top tier business debt relief company. We understand exactly how these personal guarantees ruin businesses and create financial chaos for owners.

LEGALLY SPEAKING: WHERE DOES THE LAW STAND?
Federal Trade Commission (FTC): The FTC warns against unfair or deceptive financial practices. You can learn more at https://www.ftc.gov. While these rules tend to focus on consumer lending, they also offer insight into how creditors might overreach.
Consumer Financial Protection Bureau (CFPB): The CFPB offers resources to help small business owners understand their rights. See https://www.consumerfinance.gov.
Small Business Administration (SBA): Check out https://www.sba.gov for guidance on more conventional funding options and ways to mitigate debt.
State Laws: Some states regulate merchant cash advances more rigorously than others. For instance, New York has scrutinized the confession of judgement (COJ) practice often bundled with personal guarantees. Violations of state law could mean your MCA contract is vulnerable to legal challenges.

REGARDLESS OF YOUR SITUATION, REGARDLESS OF YOUR MCA PROVIDER, REGARDLESS OF YOUR BUSINESS SIZE—we can help you.

HOW PERSONAL GUARANTEES MAKE DEFAULTS WORSE

1. Personal Liability
   If your business stops paying, the MCA provider can hold you personally responsible. This means your bank accounts, home, or other assets are suddenly at risk.
2. Aggressive Collection Tactics
   Once you default, some MCA providers file lawsuits or even request a COJ. They want to TAKE YOUR WAGES, seize personal property, or place liens on your personal assets.
3. No Room to Breathe
   Daily or weekly debits continue to drain your business bank account. If the MCA defaults, you could lose both your business and personal finances.
4. Collateral Damage
   A personal guarantee can also harm your personal credit score, because the creditor may report your default to the credit bureaus in your name.

DELANCEY STREET SAVES A BUSINESS OWNER OVER $400,000.
This was a real scenario where a personal guarantee led to a rapid lawsuit. Our legal team jumped in, negotiated with the MCA provider, and reduced the total balance significantly.

WHAT YOU COULD FACE

• Possible Lawsuit in State or Federal Court
• Judgment Entered Against You Personally
• Liens on Your Home or Other Assets
• Wage Attachments (i.e., attempts to TAKE YOUR WAGES)
• Levies on Your Personal Bank Account

Penalty Under Various Laws

• Under Uniform Commercial Code (UCC) Article 9, secured parties can repossess collateral if it’s pledged. If your MCA agreement references personal property, you might lose crucial assets.
• Under state garnishment statutes, if a judgment is entered, creditors might try to take a portion of your paycheck.
• The IRS (see https://www.irs.gov) doesn’t get involved in private disputes between MCA creditors and borrowers, but if your assets are seized and sold, you may face complex tax implications.

ANYWAY, HERE’S THE BOTTOM LINE: Personal guarantees turn a “business issue” into a “personal nightmare.”

OUR DEFENSE STRATEGY

1. Immediate Negotiation
   We reach out to the MCA provider right away. Because we’re Delancey Street, we have significant experience in dealing with MCA collectors. We explain your financial challenges and demand a sensible payment plan.
2. Legal Assessment
   Our sister-law firm (led by attorneys like Steven Raiser) reviews the MCA contract for any violation of state or federal law. If the contract is found to be overreaching or deceptive, we use that to your advantage.
3. Settlement
   We try to reduce the outstanding balance. We focus on getting you more time to repay and possibly cutting down the total debt amount.
4. COJ and Confession of Judgement Defense
   If a COJ is in play, we examine it carefully. If it was improperly filed or served, we’ll seek to have it vacated. We fight. We protect. We win.
5. Asset Protection
   We help you structure your finances to shield personal assets whenever possible. We analyze possible corporate structures or reorganizations that separate you from the business liability.
6. Litigation When Needed
   If the MCA provider sues, we stand by your side in court. We raise defenses like unconscionable interest rates or improper disclosures.

WHAT SHOULD YOU DO IF YOU’RE DEFAULTING ON AN MCA?

• Talk to Us First: We can help you. By consulting Delancey Street, you get immediate insights on your options.
• Document Everything: Keep copies of your MCA agreement, bank statements, and any communication with the MCA provider.
• Cut Costs: Show lenders you’re serious about repayment by reducing unnecessary expenses.
• Explore Alternatives: Sometimes a business debt consolidation loan, or invoice factoring, could be cheaper.
• Research: Visit https://www.sba.gov and https://www.consumerfinance.gov for official resources on small business debt.

REGARDLESS OF YOUR LENDER, REGARDLESS OF YOUR CREDIT, REGARDLESS OF YOUR PAST DEFAULTS—WE CAN HELP YOU.

Delancey Street is here to provide top-tier business debt relief. We focus on merchant cash advances, business credit card debt, SBA loans, and more. When you enroll in a business debt settlement program like the one offered by Delancey Street, you’re choosing a team that fights for you.

CONTACT US FOR A FREE CONSULTATION
We’re ready to review your MCA agreements and personal guarantees. We’ll help you find a path forward that protects your livelihood—and your personal assets.